State budget-writing committee leaders stepped up their action against the health department in their efforts to get the agency to correct actions from an audit released this summer.

While going over the new process for passing maintenance budgets before considering line item requests, Legislative Services Office Manager Keith Bybee on Friday informed Joint Finance and Appropriations Committee (JFAC) members that he didn’t include the indirect support services fiscal year 2025 budget for the health department.

Bybee said this was a “negotiation piece” to push the Idaho Department of Health and Welfare to complete a corrective action plan in response to the eight significant findings from an audit on the agency’s administration of a grant program.

Indirect support services include the agency’s HR department, the director’s office, IT, and other administrative functions.

JFAC Co-Chairs Rep. Wendy Horman, R-Idaho Falls, and Sen. Scott Grow, R-Eagle, said that they are hopeful the agency will work with them before the Legislature adjourns to correct the action. After it submits a plan, the committee will take up the budget.

“Without a corrective action plan, it calls into question our ability to appropriate,” Horman said.

The indirect support services budget request for fiscal year 2025 is $56.4 million and funds 262.6 full-time positions.

Horman and Grow said this is the administration part of the health agency’s budget, and was selected so that it wouldn’t impact those who were receiving services. It also wouldn’t affect the agency’s current fiscal year budget. Fiscal year 2025 begins July 1.

“We’re not punishing any of the recipients, any of those that are receiving services,” Grow said. “This is just hoping the administrative part of that agency understands the need to correct the audit findings.”

Asked what happens if no corrective action plan is submitted, Horman responded, “We’ll cross that bridge if we get to it.”

The Legislature won’t be able to adjourn without passing a budget for every agency, so it will need to be addressed in some form before lawmakers may leave for the session.

If the division’s budget were in some way eliminated, a health department spokesperson said there would definitely be impacts.

“Shutting down administrative functions most definitely will impact the department’s ability to provide services to DHW patients and beneficiaries, who are among Idaho’s most vulnerable populations, including the elderly, disabled, and disadvantaged families,” spokesperson AJ McWhorter wrote in an emailed response. “However, JFAC sets the rules for budgeting, and as an executive branch agency, DHW will work within the rules.”

Horman said the co-chairs have seen “positive changes” under interim Director Dean Cameron in this matter. The former director Dave Jeppesen retired at the end of December.

The announcement of the decision came during a discussion on the committee’s new process for setting budgets. Starting Monday, members will begin passing agency maintenance budgets, which are just enough to keep them running with no increases. Later on in the session, the committee will pass budgets that include the line item requests and potential increases.

Right now, the health department’s indirect support services budget will be withheld until the plan is submitted.

Horman said the decision was made to withhold the budget after discussions the night before and early Friday morning.

On Thursday, committee members heard the Legislative Services Office’s (LSO) annual report on uncorrected findings of its audits — many of which stemmed from the health agency’s August audit.

The audit was conducted after JFAC members heard the health department had potentially administered grant funds to ineligible programs. The Community Partners Grant was funded through federal pandemic funds and meant to go to after-school programs. State lawmakers added the requirement that the money go to organizations that service school-age children ages 5-13; concerns grew that programs serving younger children received the grant.

Last February, the committee directed LSO to conduct an audit of the program. In August, the office released the report that included eight significant findings. Auditors found the findings serious enough to refer the case to the Idaho Attorney General’s Office; an outside investigator is currently doing a criminal investigation into the administration of the program.

The findings were that the department didn’t maintain sufficient documentation to support its award decisions, some recipients received more than the maximum amount allowed through statute by applying multiple times through variations of the entity name, there wasn’t enough evidence that the department ensured compliance with age requirements, staff didn’t properly review applications, reports from the recipients were inadequate to ensure funds were spent appropriately, payments distributed in fiscal year 2022 exceeded the $36 million appropriation, and payments were not made on time.

The department at the time disagreed with all of the findings, and Jeppesen told the office that because it didn’t agree with the findings, it would not be submitting a corrective action plan.

On Tuesday, the interim director did not send a full corrective action plan, but sent a letter that indicated the agency would update some of its policies and training in response to the audit.

There is a budget hearing set for the indirect support services division scheduled for March 5.

Guido covers Idaho politics for the Lewiston Tribune, Moscow-Pullman Daily News and Idaho Press of Nampa. She may be contacted at lguido@idahopress.com and can be found on X @EyeOnBoiseGuido.